Ruminations On The Future Of The Salary Cap

Mike Florio reported yesterday for Pro Football Talk that a source—who already predicted that the salary cap would exceed the originally projected amounts of $126.3, and subsequently $130 million—also believes that the salary cap figure will ultimately exceed the newly projected amount of $132 million.

Perhaps significantly so, by a “few million”, suggesting possibly $134-136, or a more than $10 million increase over last season. Florio went on to write that the source indicated these significant increases are “expected to become the trend in future years”, indicating that the cap could quickly exceed, for example, $150 in just a few short years.

I have been pondering the implications of such a significant and frequent increase, and wondering at what point it makes the salary cap irrelevant.

After all, there is a point at which even the richest and most generous owners will acknowledge that a salary does not equal the value of the performance given in compensation, regardless of whether or not it becomes a cap issue.

And some owners simply don’t like to spend all that much, and frequently have tens of millions of dollars in cap space remaining year to year. At what point does the salary cap become an arbitrary ceiling that nobody will reach?

How far off is that point from where we are now? Are we in danger of in effect turning the NFL into the uncapped MLB, which has a far greater correlation between how much a team spends and how successful that franchise is in any given season?

But that is just one aspect of the implications that could result from the ramifications of this report, and this one may still be far off from now. Inevitably, there will be other effects on how the business is run on a team level.

As mentioned earlier, I believe that teams will by and large self-police themselves by keeping upper-value contracts at a comparatively reasonable level. I don’t foresee quarterbacks making $50 million a season any time soon, for example. There is simply a point at which the expenditure doesn’t justify the product delivered in return.

What I do believe will happen is that, rather than radically reshaping the dollar amount of high-value contracts, the successive and significant increases in the salary cap will result in more numeroushigh-value contracts.

In a sense, this could result in a bit of a throwback to the pre-free agency era of the league, during which it was much easier for teams to keep their players together for a much longer period of time.

The Pittsburgh Steelers are just one of many organizations during the 90s that struggled with losing players to free agency that they would otherwise love to keep around. We now saw over the course of the past few seasons the price that a team could be forced to pay trying to keep a core together.

While it likely won’t prevent the Mike Wallace-type players of the league from fleeing for ‘greener’ pastures, it could, for example, help the Steelers retain the next Keenan Lewis or Jason Worilds.

And more to the point, I believe that this would specifically benefit teams with strong organizations and a coach that players want to play for. The Steelers would theoretically be one of those teams, certainly.

For now, we don’t yet even know what the salary cap for the 2014 season will be officially. That naturally makes this all very speculative at this point. But given the significant ramifications it could have if Florio’s source is to be trusted, it seems worth discussing.

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It has been few years now so I may be incorrectly remembering, but didn’t the CBA include a clause of some sort that the average salaries a team pays out over a multiple year period must hit a floor? The idea was that the CBA agreed about a set percentage of revenue going to player salaries, and so as the cap goes up, so would also theoretically that floor. This is all revenue dependent, so it isn’t arbitrary at all. The cap is supposed to be figured as a percentage of overall revenue, so if it is expected to increase rapidly that is due to an expected rapid increase in revenues. And teams accordingly will be required to spend to a certain level per the CBA.

I think.

Berlusconi

I really hope the salary cap is not going to be much higher in the future. I fear that this could be leading to a situation like we have in football (soccer) in Europe. E.g. in Spain there are 2 financially strong teams (having total salaries above $200 million per year, and that for only about 22 players. Also you can add another $50 million per year for the transfers of these football clubs) dominating La Liga all the time. Nothing more frustrating than that as a fan of a team with less financial power. Keep it tight!

mem359

I’m going to guess that the number is 130, like originally reported. Anytime the number goes up, the reporters tend to get carried away with what it might be. (But that is only a guess.)

Shouldn’t that number be determined a lot earlier than it is (in an ideal world), since teams have to plan ahead to avoid the ceiling and the floor?

Brendon Glad

I’m pretty positive that the new CBA includes a “cap floor” that is a VERY significant % of the cap number (off-the-top I think it was 80-90%. A very key fight by the NFLPA that they actually won. So NO more Tampa Bays’ and KC’s of 2-3 years ago are allowed from here to the end of the 10 years. At least that’s how I remember it. The salaries will just go up. Good agents will keep using Jerry Jones and Dan Snyder “precedents” to get great contracts for mediocre players. (Al Davis used to be used well that way too.) And good owners will do their best to remind the agents that those owners are not the owners to be “setting precedents” in the salary-cap era…unless it’s about marketing. So I’m not worried, about the same things matthew is…unless I’m remembering the CBA incorrectly. I’m more worried about how Seattle is drafting. When your 3 biggest signings of the last 2-3 years have all drastically underperformed or failed (Rice, Flynn, Harvin)…and you STILL are easily under the cap and dominating with no clear end in sight…then that’s what I worry about the most. Glad they are in the NFC, but you still don’t win Lombardi’s without dealing with the NFC eventually.

grw1960

I hope you are right about more upper value contracts. I thought the Steelers did a pretty god job of spreading the money around in the years before the last salary cap restructuring, because of the new CBA. It is just going to be nice to know that the Steelers will have some money this season and won’t be handcuffed in any. When choosing who to keep or sign. It could also affect what positions they target in the draft.

Brendon Glad

I don’t see how it matters. It’s a pretty hard cap. The only flexibility is in the prorated signing bonus/restructure aspect, and it still ALWAYS shows up eventually in the cap. And the Steelers use that flexibility as much as anyone, if not more. The Pirates and my KC Royals are the 2 fanbases that need to be terrified of the new TV deals and the repercussions of them. Not Steelers fans. But maybe I am way off in how I understand the new CBA.

The NFL likes the idea that”On any given Sunday”, your team might win. They love the fact that teams routinely go from worst to first and vice versa from one year to another. Therefore they will make sure that the cap does not explode too quickly or become irrelevant.

Caesar

Their cap situation is coming calling in the next year or two. Their whole situation is predicated on a starting QB paid at a third round salary. They will start having to make hard decisions starting this year just like everyone else.

steeltown

Thanks.. I was foggy on that

Brendon Glad

I agree, but I hope they still: 1) aggressively pursue a pay-cut or release for Woodley, and Taylor; 2) very tentatively request an extension of lesser yearly avg salary for Troy P.; . On 1)I’d be playing hardball “Take a BIG pay cut or get cut.” On 2), Cutting Troy P. would not be in the equation in 2014. But I would be trying to get an extension that averages less per year. If he balks, then I’d just leave it alone. But I’d ask: NICELY, and with RESPECT, but I’d still ask. Once that dust clears, perhaps the Steelers will have room to actually be in the UFA game for 1 or 2 key guys. (Lots of intriguing CB’s out there who actually intercept passes now and then without giving up production like Ike did last year).

Brendon Glad

I respectfully disagree with “their whole situation is…” A decent chunk of it is. What UFA’s do they even have? Bennett? Their “hard decisions” only involve who to extend this summer. And “hard” is only how you look at it. Is “who to extend” because they are so loaded “hard”? Or is “who to extend” EASY BECAUSE you are so loaded? Sure seems like non-contributor signings like Rice, Flynn, and Harvin haven’t done much damage.

Caesar

I just mean that as rookie contracts start to expire and they have to give second contracts to Russell Wilson, Russell Okung, Max Unger, Richard Sherman, Bobby Wagner, Earl Thomas….. I was meaning that in the coming years, plural, they will have tough decisions to deal with. But I agree wholeheartedly that they are nonetheless in an enviable position.

Jefferson_St_Joe

Thanks for posting. Projections for the future of the cap are critical to contract amounts and structure. Overall, I think the spending minimums will prevent an MLB situation and still keep the cap relevant.

bradblackandgold

I believe it is 89% over 4 years, but it also includes contracts signed in a given year and not the cap itself per se. So you could sign your stud QB to a new contract (say 30 million signing bonus) and still only spend around 90 million toward the team’s cap for all of your players for that year.